TMI Blog1983 (7) TMI 307X X X X Extracts X X X X X X X X Extracts X X X X ..... expression by or on behalf of a manufacturer from one or more factories occurring in the aforesaid notification, warrant the integration of the totality of the goods cleared by each of the Appellants for the purposes of the notification? (iv) Are there a plurality of manufacturers or a single? (v) In view of the composition of the three Appellants/partnership firms, is each of the individual partners a manufacturer ? (b) Was there any contravention by any of the Appellants of the various rules specified in the show cause notice dated 17-12-1981? (c) Were the show cause notices barred by limitation? (d) Were the show cause notices and the adjudication order vitiated on account of absence of territorial jurisdiction in regard to the factory owned by the Appellant herein. 2. (a) Notification No. 89/79, dated 1-3-1979, in so far material exempts goods, falling under Item 68 of the 1st Schedule to the Act, cleared by or on behalf of a manufacturer, from one or more factories, from the whole of the duty leviable in respect of first clearances upto an aggregate value of Rs. fifteen lakhs, subject to certain conditions which are not material for the present purpose; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account as prescribed under the aforesaid Rules, - and (ii) requiring them to show cause as to why central excise duty amounting to ₹ 2,13,076.88 should not be demanded from them under Rule 9(2) of the said Rules and why penalty should not be imposed on them under Rule 173Q for contravention of the aforesaid rules; (g) in the aforesaid notices, the values of goods cleared severally by the three Appellants during the year 1979-80 were clubbed together and the benefit of the exemption in Notification No. 89/79, dated 1-3-1979 was given in respect of such aggregated quantity of goods in the year 1979-80. Similarly, the values of the goods cleared by the Appellants in the three Appeals during the year 1980-81 were aggregated for the period during which the Appellant firms were in existence during that year but it does not appear that the benefit of the Notification No. 89/79, dated 1-3-1979 as amended by Notification No. 105/80, dated 19-6-1980 was actually afforded, although it was stated in the notice that the said notifications had been taken into account for the computation of the value of goods exempted thereunder; (h) the three Appellants in their replies, while ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able goods removed from the factories owned by all of them during the financial years 1979-80 and 1980-81; (d) in the result, each of the partners was required to pay central Excise Duty amounting to ₹ 2,13,076.88 under Rule 9(2) of the Central Excise Rules, 1944 on the excisable goods manufactured and cleared during the financial years 1979-80, 1980-81; (e) significantly, however, the learned Collector refrained from imposing any penalty on any one of the partners of the three Appellants. He gave no reasons for doing so. 5. In the Appeals before us and in the course of the hearing of the case, it was, inter alia, submitted by the learned Counsel appearing in the three Appeals, that - (a) each Appellant is a separate legal entity and, in excise law, the expression manufacturer applies with greater appropriateness to a firm engaged in manufacture than to the individual partners composing it; (1961 E.L.T. 59 - Rice and Oil Mills Partnership Firm v. Dy. Superintendent of Central Excise, Trichur); (b) the excisable goods manufactured by all three Appellants cannot be aggregated for the purpose of Notification No. 89/79, dated 1-3-1979, or 105/80, dated 19-6-1980 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cisable goods but also any person who engages in the production or manufacturer on his own account. Accordingly, manufacturer is a person. He may be one who would be manufacturer within the ordinary meaning of the word. He himself brings into existence an article or product that is excisable. He may also bring into existence an article or a product through the instrumentality of hired labour. Both these categories of persons are manufacturers in terms of the inclusive definition of the said word; (b) it is not for the first time that the word manufacturer /person in the context of aggregation of goods manufactured in one or more factories by or on behalf of the same person when he happens to be a partner in a plurality of firms, had arisen for construction - (i) Item 12A(V) inserted in 1954 in the First Schedule to the Central Excises and Salt Act, 1944 exempted rayon and artificial silk fabrics produced or manufactured in one or more factories by or on behalf of the same person in which less than 25 powerlooms in all were installed. The question was if the powerlooms owned by a plurality of partnership firms in which the assessee was a partner, were to be aggregated f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... common partner s, if a person is a partner in two partnership firms, those two firms cannot be treated as one and the same; (iv) finally, in 1981 E.L.T. 177 (Jaswant Sugar Mills Ltd., Meerut v. Union of India, a Division Bench of the High Court of Delhi had held on a construction of Section 2(f) of the Act and Notification No. 13/65 read with Section 3(42) of the General Clauses Act that, where a person owned as a sole proprietor a factory at Meerut and was a partner in another factory at Bijnore, in so far as the latter concerned, he is a person distinct and apart from the partnership controlling manufacture and accordingly, the production of sugar at Bijnore and Meerut mills could not be clubbed together for grant of rebate under the notification in question; (c) it makes for no difference for the applicability of the ratio of the aforesaid decisions if, instead of one or two persons happening to be partners in a plurality of firms, all the partners in one firm are identical with those in the other firms, as in this case. A partner in any of the three firms is distinct from each of the three firms and vice versa. Each of the three firms is separate and distinct from the oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w we had taken supra, it is unnecessary to consider the other issues that arise, in the interest of completeness, we proceed to decide the other issues as well. 9. Much prior to 17-12-1981, when the show cause notices were issued, Rule 10 of the Central Excises and Salt Act, 1944 was omitted from the Rules and re-enacted as Section 11A of the Act itself. A perusal of Rule 9 and Section 11A would disclose that - (a) the removal of excisable goods from the place of manufacture without payment of duty leviable in the manner prescribed and permission of the proper officer on an application made to him in an appropriate form is prohibited, subject, however, to some exceptions, not germane for the present purpose; [Rule 9(1)]; (b) the manufacturer is bound to pay on written demand within the period specified in Section 11A of the Act, the leviable duty, in respect of goods removed from the place of manufacture, in contravention of Rule 9(1) [Rule 9(2)]; (c) in any case of such contravention, the manufacturer becomes liable to a penalty extending upto two thousand rupees and the goods shall be liable to confiscation [Rule 9(2)]; (d) when duty had not been levied or has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed goods cleared by a manufacturer from one or more factories, it was not obligatory for the Appellants again to apprise the excise authorities of their composition even though - (i) there has been no change therein; and (ii) the law in regard to aggregation of goods manufactured severally by partnership firms is well settled. The Appellants could not have anticipated an aggregation contrary to law; (c) their failure to reiterate the constitution of the Appellants with identical partners, cannot, per se, be an act of fraud or wilful mis-statement or suppression of facts in terms of Section 11A of the Central Excises and Salt Act; (d) fraud has not only to be alleged but particulars thereof have necessarily to be furnished; there was not even an allegation of fraud in the show cause notice; or of mis-statement or suppression of facts; (e) in the premises, the three cases of the Appellants do not fall within clause (1) of the proviso to Section 11A so as to attract the five year period of limitation to govern the adjudications; (f) nor does the second clause of the proviso to Section 11A apply when there has been no contravention of the rules much less ..... X X X X Extracts X X X X X X X X Extracts X X X X
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